Major port operators have been awaiting the shipping ministry?s new guidelines that would allow them to fix market-linked tariffs. The guidelines are expected to level the field for major and minor ports, create parity between existing and new projects, spur private investment and speed up projects.
Shipping minister GK Vasan expects to announce the new deregulation laws in a month. Earlier this year, the shipping ministry had said it would partially deregulate tariffs for new projects from April 1. But the policy is yet to be implemented.
Tariff regulation has hindered investment in the ailing port sector. NN Kumar, the deputy chairman of JNPT notes: ?Private players are hesitant to bid for public-private-partnership (PPP) projects at major ports as they feel that their operations will be limited by the tariff regulations. All ports need to be on an equal standing on how much they can charge.?
At major ports, vessel and cargo-related tariffs are set?relatively low?by the Tariff Authority for Major Ports (TAMP), set up in 1997. ?TAMP has probably lived its time?, feels Chennai Port chairman Atulya Misra.
It is not clear whether tariffs of existing projects would also be deregulated along with the new ones, though the shipping minster has promised to come up with guidelines that would benefit the existing projects.
Says Milind Deora, minister of state for shipping, ?Tariffs for new projects will definitely be linked to the market prices. But currently we are also working on how to migrate existing projects so that they can get the same benefits.?
Anand Sharma, director, Mantrana Maritime Advisory, says, ?The ambiguity over deregulating existing projects has affected investments this year.?
Without funds from the private sector, large port projects have been stalled. JNPT?s R8,000-crore container terminal project is now up for bidding after a delay of nearly three years. Similarly, Chennai Port?s R3,000-crore mega-container terminal project received a tepid response and has gone for bidding thrice.
In FY13, the shipping ministry awarded 27 projects worth R6,302 crore, though it targetted 42 projects worth R14,500-crore. Deregulation could raise interest in the sector. The ministry believes its FY14 target to award 30 port projects worth R25,000 crore would be met if deregulation happens.
Deregulation is delayed when major ports are seeing a shift in cargo to private ports. Cargo handled at major ports dropped 2.6% to 545 mt in FY13, shows Indian Ports Association data. In contrast, the Gujarat Maritime Board, which regulates minor ports in the state, said traffic at its ports rose 13% in FY13.
Chennai Port?s Misra believes deregulation does not mean tariffs would spike. ?Tariffs would only rise to an extent that the market allows it to. So there is no question about higher tariffs deterring shippers.?